Correlation Between Moonbae Steel and FnGuide

Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and FnGuide at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Moonbae Steel and FnGuide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moonbae Steel and FnGuide, you can compare the effects of market volatilities on Moonbae Steel and FnGuide and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Moonbae Steel with a short position of FnGuide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and FnGuide.

Diversification Opportunities for Moonbae Steel and FnGuide

-0.18

Correlation Coefficient

Moonbae Steel  FnGuide

Good diversification

The 3 months correlation between Moonbae and FnGuide is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and FnGuide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FnGuide and Moonbae Steel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Moonbae Steel are associated (or correlated) with FnGuide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FnGuide has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and FnGuide go up and down completely randomly.

Pair Corralation between Moonbae Steel and FnGuide

Assuming the 90 days trading horizon Moonbae Steel is expected to under-perform the FnGuide. But the stock apears to be less risky and, when comparing its historical volatility, Moonbae Steel is 1.81 times less risky than FnGuide. The stock trades about -0.16 of its potential returns per unit of risk. The FnGuide is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  798,000  in FnGuide on October 26, 2024 and sell it today you would lose (19,000) from holding FnGuide or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Moonbae Steel  vs.  FnGuide

Moonbae Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Moonbae Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FnGuide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FnGuide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Moonbae Steel and FnGuide

The main advantage of trading using opposite Moonbae Steel and FnGuide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, FnGuide can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FnGuide will offset losses from the drop in FnGuide's long position.

The idea behind Moonbae Steel and FnGuide pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.